Mar 1

Calling Your Mother Is Important

posted 9:00 AM Mar 1, 2011 by Peter Aceto under Savings


Years ago, I remember seeing the sound stage for U2’s Achtung Baby Tour. The thing was just massive. Behind the band, there was an Orwellian-like screen flashing the words, “Call Your Mother.” I remember thinking how funny it was that in the middle of a show, with so many people enjoying the music, that that message could mean something to almost everyone there.

I’m all about simple messages (Save your money!). To me they carry the most impact; the fewer words the better.

I do call my Mother pretty much every day. She’s the master at keeping me real. And while she doesn’t bug me anymore about homework or making my bed, she does give me a hard time about being the CEO of a bank.

As Mother’s do, she was talking to her hairdresser recently about her son, me. The conversation eventually turned to finances. She has been going to the same hairdresser forever and he probably knows more about me than I do.

Recently he confided in her that like many Canadians he was concerned about what he was going to do when he couldn’t physically work. He was a renter and had little savings.  He’d been thinking he needed to save more and pay off his debt, but other things seemed to take priority.

Unknown to my Mom, her hairdresser opened up an ING DIRECT account years back and made the savings automatic. He was able to build a healthy downpayment and bought a home.  He also chose ING DIRECT for his mortgage, getting for himself our “unmortgage” and regularly listened to our advice about paying off your mortgage faster.  After several disciplined years he is now a few mortgage payments away from owning his home – 100% mortgage free!

Of course, my Mom was ecstatic – not so much that her son’s work, passion and mission of saving had filtered down to her hairdresser, but that her hairdresser was now much closer to a stress-free retirement and that he was so much happier about his future.

The beauty of being a customer service-focused business is that people aren’t shy about giving us feedback. I get customer email on a regular basis, and I’m always happy to learn how our team’s help and guidance have helped people live a healthy financial lifestyle.

One of these emails came recently from a customer who’s own Mom had unfortunately passed away. For her, it meant traveling to another province to take care of things. Over the years she’d slowly taken our advice about making savings automatic by making monthly automatic contributions to her savings account. When the unfortunate time came for her to take care of her Mom, she was able to do so and realized at that moment that things happen and savings is the only insurance policy you can rely on to bounce through tougher times.

As you can see I have always been very proud  of my Mom, and I am truly humbled that ING DIRECT’s mission to “Give the Power of Saving to all Canadians” is making a difference for all kinds of people – something to think about as RRSP season draws to a close.

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Feb 14

Meeting, Tweeting and Saving.

posted 9:00 AM Feb 14, 2011 by Peter Aceto under Savings


Last year may have been the Year of the Tiger, but after hosting a Meet and Tweet on Social Savings recently at Social Media Week in Toronto, I’m inclined to think it may have been the Year of the Coupon; the year saving money became cool again.

At the Meet and Tweet – which was a good chance to meet people and talk about emerging social and mobile trends specific to group buying – we all took part in what quickly turned into a very impassioned discussion on how social buying has actually reinvigorated people’s desire to save. Call it what you will – deal hunting, social savings, group buying – there are a lot of influential thinkers on the topic – both at the meet-up and elsewhere – that have called it one of the biggest consumer trends for the year ahead. Mashable, Trendwatching and Socialnomics are among them, and largely because of the 2 billion people online who can now leverage the power of group buying to save money.

Clipping coupons – as someone there jokingly referred to it – really has come a long way. If you look back on how group discounting started as a marketing tool, it was Asa Grigs Candler – one of the founders of Coca-Cola – who recognized the power of social savings. He used coupons to gain product awareness and sell the then-brown tonic at a reduced price to a broader audience. It’s considered one of the main reasons Coca-Cola went on to do what it did, and all because it gave people a great deal.

Our two models – social buying and direct banking – actually evolved and have become so successful because they share a lot of the same founding principles. They are about innovation, giving the upper hand to consumers, and using social channels to give customers more information to make better decisions about their money – principles we embody at ING DIRECT. They give broader access to products and services that are likely to better suit customers’ needs, and similarly for businesses they offer more opportunity to connect with the right kinds of customers – one of ING DIRECT’s key focuses. While there’s a profit motive for the businesses involved and certainly a savings motive for consumers using it, at its core social buying is about saving people money – the same reason ING DIRECT started out 14 years ago.

What was two years ago a way to reinvent a rather dated marketing tactic has today become a social and saving phenomenon, and has likely changed consumer spending habits forever. Last year alone saw more than 50 start-ups in China that launched Groupon-type websites. In Toronto, there are a few a month now launching. I like seeing all these companies innovate and challenge the market to find efficiencies, but moreover I like how many people have saved money while using them.

As the Meet and Tweet rolled on, and as the discussion on social savings led to a question on Google’s bid to buy Groupon for $6 billion late last year, I thought to myself that the biggest news to come of the proposed deal was not that Groupon thought they were worth more money, but how many more people would now become familiar with group buying – via sites like www.teamsave.com, www.dealpage.ca, and www.redflagdeals.com (all speakers at the Meet and Tweet) – and would start getting on the savings train by using them.

Group buyers are a very dedicated group of buyers, but they are also a very dedicated group of savers. Savers getting better deals – I like that.

View photos from our ING DIRECT Meet and Tweet event on Facebook.

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Jan 31

Just do it

posted 2:42 PM Jan 31, 2011 by Peter Aceto under Retirement


There are not many financial goals in life more important than saving for your retirement. At this time of year, we’re bombarded with messages from banks, financial experts and the media about how much we need to be saving, where we should be saving and how far behind we are in our retirement savings. There are so many questions that need to be answered. Do I save using a TFSA or an RRSP, or both? Is it better to pay down my mortgage or save for my retirement? What about paying down my other debt? There are certainly a lot of priorities competing for a limited amount of the money we make. The whole thing is enough to make some of us want to throw in the towel and avoid it all together.

But we shouldn’t avoid it. In fact we should do the opposite and take it head on. Actually, it’s not really that complicated. Start today by beginning to save something – a little or a lot – on a systematic basis. You know, $50 per week or $100 per month. This advice is not new, or complicated, or sexy, but it is powerful. No matter the amount, the fact that you are saving something, gives you freedom. Saving will give you freedom for your future and give you the potential to take advantage of an opportunity when it comes your way or to bail you out on a rainy day.

However you choose to save and for whatever goal, beware of shortchanging your savings by paying unnecessary fees. Fees come in small bite sizes but they eat away a significant portion in the end. A recent survey we conducted with Angus Reid found that almost half of Canadians are unsure of the fees they pay to buy mutual funds – one of the most popular investments we use to save for retirement. If you add up all the unnecessary fees you pay over several decades of investing, they can make a huge difference in what you’re left with in your golden years.

At the end of the day, no matter where you choose to save your money, we get satisfaction from knowing we are helping Canadians take control of their financial destiny. With a bit of information, more and more Canadians are feeling empowered to take their saving and retirement planning into their own hands.

There is no secret to saving for retirement. It’s the same as saving for any other goal, financial or otherwise. Getting started is just the first step but it is the biggest step. And like many other goals, each step after the first is easier than the last.

This is the solution we advocate at ING DIRECT, and one that I believe in personally. Any amount, be it large or small, does make a difference. It’s easy to set up automatic payments into an RRSP account or into a high-interest savings account as a means of building your retirement savings – set it and forget it. It’s that simple.

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Jan 17

Consumer debt and home equity

posted 4:39 PM Jan 17, 2011 by Peter Aceto under Savings


Last month I wrote about my concerns regarding the level of consumer debt, compared to savings, and talked about goals we could all set for ourselves heading into 2011. One of my personal goals this year is to demonstrate leadership in terms of helping our customers, and all Canadians, understand what it means when our personal debt is growing faster than our income. In particular, I want to focus on how we treat the most valuable asset most of us will own during our lifetimes, our home.

Here are some facts. In this low interest rate environment, Canadians’ debt levels – including credit cards, loans and mortgages – have grown much faster than their incomes. Debt levels are now about one and a half times disposable income, an even higher level than the debt-to-income levels of Americans. Total consumer debt in Canada now exceeds a staggering $1.4 trillion. The Bank of Canada and the Finance Department have expressed concern about personal debt, specifically about what would happen if interest rates were to rise and Canadians discovered they could not afford to be carrying these debt levels.

Where are Canadians getting all that spending cash from? Increasingly, from their homes. In the last decade, money borrowed by Canadians against the value of their homes, using Home Equity Lines of Credit or HELOCs, has grown 170 per cent, or twice the rate of growth of mortgages. Many HELOCs can be accessed via bank credit cards, so consumers can go shopping at the local mall, put down a credit card, and the cash comes right out of the equity in their home. The one most valuable and steady asset that traditionally was set aside as every family’s long-term nest egg is being whittled away. We just can’t keep treating our homes like ATMs. For the typical Canadian, the long term priority should be getting your home paid off, a view shared by most ING DIRECT customers who’ve taken advantage of our unmortgage, designed to help home buyers pay off their mortgages as quickly as they can possibly afford to.

Prime Minister Stephen Harper spoke about this problem last week, and this week Finance Minister Jim Flaherty introduced new mortgage rules to limit the amount Canadians can borrow against their homes. While these moves are prudent, it is unfortunate that the government needs to step in to change the behaviour of both consumers and lenders. Also, this only reduces the ability for Canadians to exacerbate this issue going forward and does little to reduce the debt levels that exist today. So, we still have an issue that requires attention.

We need to go further. We need to help change the way Canadians think about borrowing money and their financial independence. At ING DIRECT our business has been built on a foundation to help Canadians live a healthy financial lifestyle and here is our Canadian Charter of Financial Independence. I believe that banks and bankers do have a responsibility to speak out about this issue. We need to help Canadians understand the risk they’re taking by carrying such high levels of debt and what they can do to save their money and put their families on a much more solid financial footing for the future. As business leaders, I think we all have a responsibility to help Canadians understand what debt means to their financial future which is why I have always been passionate about this issue.

While lines of credit drawn from the hard earned equity in your home can, in some circumstances, afford people with more financial flexibility, often times it does just the opposite. Using the equity in your home to buy things extends the time it takes to pay off your mortgage, forces you to take on significantly larger interest payments over time and potentially threatens your ability to manage your personal and familial finances down the road when interest rates rise – and yes, interest rates are certainly expected to rise in the months ahead. That’s a risk that’s not worth taking for most Canadian families. Savings are the cornerstone of a healthy financial lifestyle and for homeowners, their biggest savings account is their home.

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Jan 1

The Giving Philosophy

posted 4:12 PM Jan 1, 2011 by Peter Aceto under Savings


Philanthropy, as defined in Wikipedia, is the effort or inclination to increase the well-being of humankind. If you search Corporate Social Responsibility, you will most likely find it explained as embracing responsibility for a company’s actions and encouraging a positive impact on the environment, consumers, employees, communities and stakeholders. This all sounds very good, yet it is the “responsibility” part that is of most interest to me. We can all agree that “giving” is powerful and extremely rewarding. And there have been numerous examples of great philanthropists during our lifetime.

Henry Ford once said: “Time and money spent in helping men do more for themselves is far better than mere giving.” So, is corporate giving about increasing the organizations profile? Or is it about taking accountability for our role and responsibility as a member of society with skills, technology, expertise, manpower? Philanthropy can’t be a marketing program. If you’ve read any of my previous blog posts, you would know that I often think about the evolution of business and the separation that has built up over time between big organizations and the consumer. Somehow businesses have lost their way. People are demanding transparency and trust again. The shift that we are going through is pressuring businesses to again be members of our society, and not simply to exist to maximize profit for shareholders at the expense of society. The shareholders are not the only stakeholders.

Let me point out that there are many businesses and individuals who are doing a great job. I think of lawyers who offer pro-bono work or accountants who donate their skills to help communities and small businesses. I particularly like the example set by Zappos.com. Their culture itself is a great force for social good. Their entire business model has been based around the well-being of their employees and customers, which I am certain creates a vast positive social impact. Hey, they do this and make money for shareholders too! Then I think of Bill and Melinda Gates who developed a Foundation of Giving based on a belief that every life has equal value. They continually learn and measure the progress their efforts have on the world. There’s no question their work has made an enormous impact on humankind.

To us at ING DIRECT, in addition to giving money, we believe it’s important to also give our time and energy. In everything we do, accountability is key, and our charitable projects are geared to put accountability first to ensure we are making a real difference. We get our hands dirty. This allows us to personally meet the people who are at the receiving end of our efforts; to speak to them, learn about their needs, and get involved first-hand. I distinctly remember just a few months ago, more than 500 orange-clad ING DIRECT employees gathering to revitalize the outdoor spaces around an east-end Toronto Community Housing high-rise complex. A resident of the building came to greet us; she stood on a giant pile of dirt and mulch we were using to build the playground area for the local children and spoke to all of us from the heart. She shared her story of growing up in this neighborhood and not feeling the pride in their neighborhood, but that her children will now feel that pride. It was a powerful moment that moved each one of us. To contribute to a city where residents are proud of the places where they live, and where people feel connected to each other and their community is a humbling experience.

Jack Welch has said the self-confidence that you can give to people is the most important act of kindness. What you have done has created an environment which empowers a community to act. Again, I have had the privilege to see this in action first hand when I was involved in a project to build a new school and medical centre in one of the poorest provinces in Brazil. Meeting the doctors and teachers who became equipped to teach and save lives was an important experience for me.

We need more businesses to operate like members of society. To de-emphasize the black tie dinners and the fancy granite and mahogany offices to truly take part in their communities and make a difference, in person. To borrow a line from Bono, big brands and celebrities are like currency, so let’s all use it effectively.

As we begin a new year, my hope is that this consumer driven shift towards transparency and accountability of corporations persists – that we see more businesses taking responsibility and stepping up to their role in our society.

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